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Why Capitalism Works and Socialism Doesn't


Bob enjoys reading and writing about social, political, and economic issues.

Capitalism and socialism: the two structures that have divided the world on the future of society.

Capitalism and socialism: the two structures that have divided the world on the future of society.

Why Capitalism Is Good

Capitalism and socialism: the two structures that have divided the world on the future of society. Melodramatic? Maybe. But even though this title sounds like an intro to a lackluster History Channel special, I believe it's accurate.

These systems present two very different futures for our world, and both have strong supporters and opponents. I'm solidly a capitalist, and in this article I will explain—to the best of my ability—why.


To save time and prevent later confusion, I'm going to first make clear what I mean by "capitalism" and "socialism". I've noticed a lot of label wars, and I will do my best to avoid those. Capitalists cover quite a chunk of the right and center spectrum, including everybody from moderates to libertarians to every-man-for-themselves money grubbers. Same for socialists; there is definitely a fair amount of contrast between the far left and the center.

What I mean by capitalism is a free market (governed by supply and demand) and private property, including the ownership of the means of production. What I mean by socialism is public ownership on varying levels, but always the means of production. When you go towards the extremes, there are of course far more differences, but my views deal with the more viable and debatable center. So before we go further, allow to me to write a quick summary of why neither extreme works.

Why Both Extremes Fail

Like I said before, my views are comfortably in the center, the reason being that going too far to either side will simply not work. Let's start with capitalism.


Capitalism, in its right-most form, is every man for himself. A capitalist society is set up so that those who work hardest and smartest (not counting get luckiest in this explanation) get more resources—which makes good sense, as until there are enough resources to accommodate everyone, there will always be conflicts of interest. The only way to get more resources, after a certain extent, is to create it, which can only be done through improving technology, like agriculture, electricity, and the Internet. If we must divide our resources, it seems reasonable structure our system so that it provides incentive for productivity.

However, if the power of those on top is not monitored, society will quickly grow unfair, and therefore will not be stable, productive, or anything else I'd want a society to be. I don't think it's necessary to delve deeply into why winner-take-all society wouldn't be very stable, so suffice to say: those who are starving need food, so they must take the food from those who have it, but those who have it aren't willing to give it up, so violence is the only option left for the starving (revolution!).

How would this happen? If we go to the extreme of having little or no government intervention, like no tax (estate, income, etc.), the rich would keep getting richer. As the wealthy have more resources, their children (even if less talented and/or hardworking) are far more likely to be on top, which would soon halt societal progress. Without wealth distribution, those who are born poor must remain poor. This is—for lack of a better word—bad for their happiness, as well as detrimental to all of society on several levels (stability, for one).

As the wealthy have more influence, they have connections to politicians and appointed officials—very dangerous in a representative democracy. The government must represent the entire constituency, which will certainly not be the case if the wealthy own our political processes. Votes can be manipulated through the media ($ owned), politicians can be bribed ($ owned), and the justice system will of course be skewed ($ owned).

Factor in corporations. Without regulatory interference, companies can and will quickly build up monopolies that can drive prices far beyond the product's value, rendering the free market system of supply-and-demand useless. Basically, products necessary for everyone will be in the control of only a few. Without government to check them, those who are greediest and most selfish will rise highest in society.

I believe in human goodness, but it's hard to doubt the existence of greed and avarice. As history has proved, wealth and power can corrupt, and if some are given both without any checks on potential abuse, I can't imagine society will last long.


Far left socialism is no less dangerous. Though I think the socialist ideal of a worldwide and local cooperation is good, the socialist model is not the way to do it.

The problem with the really far left model, involving equal work and equal distribution, has already been discussed in depth by many, so I will only cover it briefly. I suppose that it once seemed like a better alternative to capitalism-gone-wild (it prevents the wealth gap and the consequent abuse of the $ owned government), but the society based on this model quickly collapses. Look at Communist China, Cuba, or to a certain extent, today's Europe. Europe is still great, but the cracks are starting to show.

The two major reasons are:

  1. Socialism discourages work and effort by shifting consequences (positive and negative) onto others.
  2. Socialism restricts freedom of the individual.

I'll begin by addressing the first. By having a "security net" so secure that it's easier to not work than to work, nobody (well, few) will work. In a future world of more resources, perhaps that will become possible. But we are not even close to being there yet, and this system is unsustainable as it takes from those who would advance society and gives to those who don't.

The entire point of a security net is to make sure those who are deserving have the ability to exercise their potential (Note: I am aware that the ultimate point is to allow the happiness of everyone. I mean in the sense of its function in a developing society.) Why work your hide off to drag along those who are just kicking back? This system encourages laziness, and after a while even those who naturally would work will stop because of their unjust load.

This problem with socialism has a solution: move towards the center. By arranging society so that those who work harder, smarter, more creatively, and more productively are rewarded, all of society will ultimately benefit from their advances. If a safety net is retained—and it should be—downward spirals can be prevented and a basic standard of living can be available to all.

However, problem two (that socialism restricts freedom of the individual.) is not so easily solved. In fact, I can't think of a solution at all. I believe this is socialism's fatal flaw, and it's basically the reason I am capitalist. I will address this in detail later on, when it flows more appropriately.

Neither extreme works.

Neither extreme works.

Solutions in the Center

Clearly, there are problems once society leans too far in either direction. When I say I'm capitalist, this does not mean I'm advocating a far right government that will quickly grow corrupt and unfair. However, even though I see problems in the capitalist model, I see more flaws in the socialist one—and those cannot be resolved except by adjust socialism so much that it becomes capitalism. The flaws in capitalism can be addressed, but ultimately, the problems with socialism are fundamental.

Addressing Flaws in Capitalism

Let me begin with how to address the flaws in capitalism. The most prominent problem is wealth gap and its consequential injustice (wealthy owning democratic process, lack of social ladder). This needs to be addressed through a better wealth distribution system, to allow all individuals the potential, regardless of circumstances they were born into, to earn the best society can offer. This involves taxes, including income tax, sales tax (though exempting necessities like food and rent), and especially estate tax. I think how high specifically those need to be is best left to those who know economics better than I, so I won't give any specific opinions there.

Some seem to think that taxation of any sort is unfair; however, taxation is necessary (like mentioned above) to prevent the wealthy and corporations from monopolizing and owning the democratic process, which would quickly make society unjust and unproductive. The money from taxes would go to a tight safety net preventing downward spirals and enabling upward mobility, preventing the wealth gap from growing too large while still providing benefits for those who work and contribute versus those who don't.

Even if we had a good wealth distribution system, however, I believe the problem would remain with the wealthy ultimately owning the democratic process. The role of the government should be to work without bias for the happiness of all the people, and that will not happen if a section of the population has greater influence. The representatives in representative democracy are not infallible or necessarily virtuous, and money can corrupt the process and consequently the society. The government being transparent would help the problem, but over time I think money will cloud the transparency again.

In order to work and not collapse into majority over minority, it would take a great deal of reform (centuries perhaps) in public education and especially in culture, so I'll leave it as just food for thought for now.

Flaws in Socialism

I'll move on to the flaws I see in socialism. I'm certainly not the first to point these out, but it doesn't hurt to reiterate them. Let's begin with problems involving government. The most apparent problem today is democratic government not being democratic, whether because of corrupt politicians or the machinations by the rich. (I think that's resolvable through a great amount of time and effort, but, like mentioned above, that's for another article.)

But even if we assume that the democratic government is functioning as it should, fairly and (most importantly) transparently, there is still a problem if there is no private property. This problem is that the society will have no protection of individual rights and will denigrate into a tyranny of the majority over the minority.

This was exactly what America's founding fathers were trying to prevent with a representative democracy. Because the "common hordes" were "uneducated and incapable" of placing the "correct" vote, representatives would help them along. Now, I think the "common hordes" are ready to truly evolve into a democracy, but this would not be a good thing if the evolution was done without safeguards. Too much power leads to abuse, whether intentionally or unintentionally; in this case, it would be too much power in the hands of the majority. Whether a direct democracy is a good idea or not is for another discussion (I think it's an idea that has potential in today's world.), but abolishing private property is a terrible idea.

Clearly if the majority (with transparency, this would be effectively the same thing as the government) would destroy individual rights if it had control over individual property. Let's leave aside means of production for now. Simplistic example: Individual enjoys black licorice, while the majority does not enjoy black licorice. The majority is not altruistic or doesn't understand the individual's love of black licorice. The individual is unable to get black licorice, as the ingredients and means of production belong to the group, and therefore the majority controls the black licorice.

For the socialist model to work, the majority has to be both altruistic and empathetic. I'm not saying that's impossible, or that it doesn't sometimes happen. But I don't think it is a good idea to place responsibility and consequences of individual actions onto all, as that causes:

  1. Lack of motivation to work
  2. Lack of freedom, and consequently
  3. Lack of happiness in the society. To do so makes the society incredibly unstable. I can't think of a way for freedom and individual autonomy to survive in a society where all are one, and consequences and rights are not conferred onto the individual, where I wholeheartedly believe they belong.

Means of Production

Moving even closer to the center, the ownership of the means of production is the final thing I want to address. My reasoning against common ownership is the same as my reasoning for individual property. In addressing essential items, like agriculture, common ownership would give the majority an incredible amount of leverage. Products necessary for all must be available for all, and I'm afraid that would not happen fairly in a society that has no safeguards for individual rights.

Once society culturally evolves and more people gain an understanding of both the mechanics of the world and also of a common goal, perhaps then we could discuss public ownership of large, national industries, like mines and farms. But that would require a great deal of reform in public education and government transparency, and neither of those should be rushed. The means will be everything in creating a stable, happy society. I don't believe we are yet ready for any venture into the left.


captilism suck on July 05, 2019:

how old are you old fart cause you sound llike one learn to educate yourself before writting ab log dumbass. I educate you stupid fuick so here it goes captilisim is a corrupt system full of greedy selfish people that are wreaking our ecocomony and way of life.Socialism will make this country have a better eccomony a stable system that gets rid of greedy selfsih bastards. However we got too many cheap gtreedy selfish people who rather think of themselves then thousands of people who are starving because they cannot get a job or a decent wage. Socialism will help this so the next time people like you say captilism works get a brain and think what it has done to thousands of people who cannot afford to pay for there food and medical care dumbass wind bag .SCREW CAPTILISM SOCIALISM FOR LIFE.

Scott Belford from Keystone Heights, FL on June 11, 2019:

Joe, it is "fallacy" not "phallacy". Other than that, your comment makes no sense whatever, dude.

Am I biased? Of course, my bias lies with what our founders desired for the United States.

Joe Tennkun on June 11, 2019:

Man you are very bad at avoiding logical phallacy. You are clearly biased my dude. Wake up from you little blackandwhite vanilla life.

Scott Belford from Keystone Heights, FL on March 19, 2018:

That 1% may be how it works today, but that is not what the creators of the Constitution had in mind. If you read the several histories about the Constitutional Convention, including James Madison's notes, you will find that protecting minorities, those without political power, was very much on their minds.

Fenix on March 19, 2018:

"American gov't is configured to protect minority rights"

Exactly, the 1%. The U.S. is a plutocracy; ruled by the wealthy. They're the ones that have the capital to lobby the democrats and republicans and ultimately shape policy.

amber on February 09, 2018:

The only time socialism has worked is in the Kibutzim (small Jewish communities) after WW2. They were small self-governed farm-based communities in virtual desert that consisted of elders, middle-aged and young people who had a total choice of which kibutzim to live in, as long as they were accepted (by working hard, of course), from what I've read.

Socialism could never work on a large scale; absolute power corrupts absolutely.

ken schneider on January 31, 2018:

people in socialist countries risk everything to migrate to

capitalist countries. enough said

Scott Belford from Keystone Heights, FL on November 24, 2017:

I would say human nature is the enemy of a true socialist society. We simply aren't built to act like socialism needs us to behave to make it work without the government becoming dictatorial to enforce it.

There as yet to be a successful implementation of a benevolent socialist society. Those that tried either turned into a Soviet Union or Cuba OR taking on aspects of capitalism and democracy to survive like England. In the end, in order to survive, both the Soviets and Cubans had to move toward a fee market.

Will Socialism replace capitalism on November 24, 2017:

I do not believe capitalism will be sustainable in the future.

With the rise of technology, forms have become increasingly complex. Cars, computers, manufacturing systems, all require huge amounts of energy and resources to create.

It is virtually impossible for an individual to compete in a market that demands so many resources, as they will never be able to raise enough capital to purchase the resources needed to compete.

Socialism will be a slow and steady process of creating companies owned by the people for the people. Profits will go to the country instead of individuals. This will create a more even distribution of access to resources.

No form can sustain itself forever. Capitalism will eventually need to change, as all forms need to change in order to find balance.

Socialism benefits all individuals instead of a select few who have increasingly more access to resources.

I am interested to know what others think of a socialist system and if this form will be a valid succession to capitalism.

:) on November 15, 2017:

I also agree that both extremes are not good, but, I think you are a little confused about the difference of socialism and communism. Socialism is a little confusing as it overlaps a lot with both communism and capitalism and usually an economic system will not fall completely into one of these categories. But it is possible to have a (more of less) socialist state that does allow for individual freedom. I am not really an economist or anything, so I don't feel like I am the right person to explain this in detail, but in socialism, the government pretty much controls the economy rather than private individuals and groups. You could still do whatever you want with your money and stuff. Communism, however, in theory all your labor should be for the benefit of a larger community. So here the individual would have less freedom. Yeah, but in the end I tend to think that a hybrid of socialism and capitalism would work well. :)

My Esoteric on October 14, 2017:

Jack, you assume it is a binary world and it isn't. Tell me, how did all the Wall Street tycoons who reaped vast rewards from the misery of most of the nation advance the world in 2008?

Jack on October 12, 2017:

Can you explain this:

"as it takes from those who would advance society and gives to those who don't."

Scott Belford from Keystone Heights, FL on September 25, 2017:

Neil, I have read it and commented on it. Unfortunately, I don't see it as a workable alternative.

Neil Sperling from Port Dover Ontario Canada on September 24, 2017:

My Esoteric - Thrivalism............... see my hub on it.

Or - check my Youtube channel for some outside the box clips on Thrivalism

Scott Belford from Keystone Heights, FL on September 23, 2017:

Pogo, Kian, and Neil - your alternative is?

Pogo on September 22, 2017:

I agree with everything you wrote, socialism and capitalism need to be balanced.

Kian Hartley on September 20, 2017:

socialism doesn't work because of the greed of humans

Neil Sperling from Port Dover Ontario Canada on September 19, 2017:

Capitalism perpetuates the notion Masters Need Slaves.

Socialism perpetuates the notion the Robin Hood had the best form of Government.

Both are screwed.

Left vs Right is a fallacy that goes no where............... the real problem is an upside down monetary system that creates a love of power.

Our monetary system was designed when mankind was in kindergarten, surely we've past into grade one.

Hello and welcome Thrivalism.

Akios on September 18, 2017:

why does america keep failing!, capitalism or just americanism?

Scott Belford from Keystone Heights, FL on January 28, 2017:

Capitalism and Socialism are polar opposites, NachoLord, for two reasons 1) Capitalism is an economic construct while socialism is a social construct with an economic component and 2) Theoretical capitalism has no controls on the means of production and distribution while in socialism society, generally in the form of gov't, controls all means of production and distribution.

What makes capitalism work so well (and is the seed of its destruction) is the inherent greed in humans for it provides incentive to be more innovative to make improve one's standard of living. Greed is the seed of destruction in theoretical capitalism because, sense there ARE no controls, it allows those who do a little bit better to exert power and influence over the rest in order to accelerate their accumulation of wealth. Therefore, free-market capitalism is no longer free without regulation to tamp down the more base of human instincts.

Theoretical socialism, on the other hand, assumes people will be satisfied with the status quo that the government imposes on them. In a perfect world where greed doesn't exist, then socialism has a chance to work. With greed, socialism, like pure capitalism, devolves into some form of dictatorship.

NachoLord on January 27, 2017:

What would it hurt if in the socialism side of things, there were tiers of wealth distribution, such like what already exists.

However each job has its own range of wages, also much like what is seen today for the MOST part.

The production could still be the idea of the citizen, and they could be given an advanced job in whatever idea they gave as a thank you from the government. The highest positions could be maxed out at say $400k a year. Just an example of an amount. That's more than enough to get by on, and you're getting paid well for the work you put in. And any large profits are seen by the government itself to redistribute and balance poorer parts of the nation.

It allows the government more freedom to use on safety nets and providing toward be general happiness of the society along with maintenance and federal wages. It puts more money toward education, as this is very important and America is slacking in it.

Doctors get paid a wealthier amount, because they worked harder and longer to learn and develop their trade. The abundance of tax dollars can pay for the entirety of people's educations. If you don't perform well in school, you can still advance in the labor force that doesn't require as much education. Speaking of advancement, each tier has advancements of their own, supervisor/manager type things and so on.

Everyone still uses the money they earn to buy and own their stuff. Like social security, but on an individual level, implement a retirement plan for everyone. Healthcare can work the same way, and we can start making larger strides in science and technology again.

Nobody really complains about taxes because it's set across the board, and that's possible because the production belongs to the government.

Small businesses are still possible and owned by citizens, and there's a safety net for that as well. Government only owns the production portion of that.

It's hard to craft an entire government on my own in the comments section of soapboxie.com. But I agree that socialism and capitalism depend on the lack of extremes.

I'm confusing myself with the many directions this could go, so I'll go to my biggest point now.

Earlier in comments, I read someone say that Western Europe was piggybacking off of capitalism, and that might be where we find the most balance for a while. Capitalism and socialism are like sisters that can't seem to get along, but on a smaller scale, such like the average citizen, you wouldn't see a difference from day to day life. Teachers would still be paid like teachers get paid, except better because that's what the government could invest in. Doctors still get paid as doctors, though not extreme because no reason to pay back debt and no healthcare issue. IT maintenance still gets to be IT.

As of right now, it seems the world is incapable of working together for the benefit of humanity. However, I wouldn't say it's *impossible* for the world to work together. But I'll admit that it won't happen in comments.

I still would like to hear counters to things I brought up, as I was trying to find middle ground on all of it. Minus the fact that we're giving too much power to the government, but that's where federal, state, and all of the checks and balances can still reside.

I may be inexperienced in politics and economics, but not merely ignorant or stupid. Please keep this in mind. I think we'll be fine though. The comments have been rather cool-headed.

Thanks for feedback!

Scott Belford from Keystone Heights, FL on January 18, 2017:

I am not sure if there is any Western country with a totally gov't controlled healthcare system (what I think you mean by socialism); maybe England. Do most, if not all advanced nations have some form of single payer systems alongside private alternatives ... yes they do; America is the exception.

Do the citizens of these countries like their system? Yes, for the most part, they do (again with the possible exception of England)

Gina Consolini R.N. on January 18, 2017:

I totally agree with you. With healthcare the system under socialism would be very bad.

My Esoteric on January 03, 2017:

Other than just being picky, there isn't very much I can quibble with much of what you write, sheabernard.

sheabernard on January 03, 2017:

I wish people would stop pointing to Western Europe as an example of how socialism works.

In Western Europe, socialism survives because it piggybacks on capitalism’s successes. It’s parasitic. It battens itself off the blood of the entrepreneur, the innovator, the investor, the shopkeeper, the go-getter. Truth be told, most of Western Europe is a mix of isms. There’s some ownership of the means of production, but more control thereof. Welfare and social insurance abound. There’s high taxation and redistribution of wealth, but not so much that the capitalist golden goose is killed off entirely.

The E.U. is the exemplar of the corporatist model with brushstrokes of socialism. It seeks to obliterate borders among its member states, giving it a quasi-internationalist aim. It acts to erase ancient, embedded differences in culture among its subjects. And subjects they are, which may be the E.U.’s undoing, other than trying to make Spaniards, Germans, and Germans, Frenchmen. (Or everybody Germans.)

Among the E.U.’s pols and bureaucrats, smugness reins; an odor of superiority hangs in the air… imperiousness with a veneer of democracy. Better that the E.U.’s Pooh-Bahs ape the old Orwellian Eastern Bloc and Asian pure socialists who appreciated grandiose democratic pretense.

As we’re seeing with the evolution of the E.U., and now are seeing creep into the U.S. -- fascism, corporatism, communism, and socialism are systems given to hierarchy, imposition, and subordination of rights. They claim to be for the people while subjecting them to the will and aims of elites. Socialism is no less prone to tact undemocratic. (Please don’t gainsay with Switzerland or Scandinavia, any more than citing pure democracy in ancient Athens. Scandinavian socialism is about as applicable to the rest of the world as is Chicago machine politics are to Stockholm

Scott Belford from Keystone Heights, FL on September 05, 2016:

Yet Jefferson didn't follow is own advice when he was President when the rubber met the road. Also, Adams (both of them), Hamilton, Madison, and most of the writers of the Constitution had a much different opinion.

Further, in TJ's quote it says "... the State governments [entrusted] with the civil rights, law, ..." What happens when the States break that trust with its citizens as has happened often?

AirChuck on September 05, 2016:

“The way to have good and safe government, is not to trust it all to one, but to divide it among the many, distributing to every one exactly the functions he is competent to. Let the national government be entrusted with the defense of the nation, and its foreign and federal relations; the State governments with the civil rights, law, police, and administration of what concerns the State generally; the counties with the local concerns of the counties, and each ward direct the interests within itself. It is by dividing and subdividing these republics from the great national one down through all its subordinations, until it ends in the administration of every man’s farm by himself; by placing under every one what his own eye may superintend, that all will be done for the best. What has destroyed liberty and the rights of man in every government which has ever existed under the sun? The generalizing and concentrating all cares and powers into one body.”

Thomas Jefferson.

Scott Belford from Keystone Heights, FL on May 25, 2016:

Very well put, DzyMsLizzy. What many people forget is that capitalism is an political/economic system rather than a social system. True socialism is the full Monte, an economic system coupled with a social system wrapped up in a political system.

"Synthetic" socialism can be a combination of many ideas, including capitalism.

Liz Elias from Oakley, CA on May 25, 2016:

Well written.

Extremism in any system, whether social, economical or religious is NEVER a good thing.

That said, here in the US of A, we have, in theory, a capitalistic system, but it is not cut and dried or pure.

The public roads and schools, paid for by tax dollars and funds doled out across the land by the government for the good of all are a socialistic feature. Likewise for fire and police services, as well as a few others such as public libraries.

Many people today act as if socialism is a dirty word. But it is not. It is extremism that causes problems. How many of those people would prefer to pay bills from the police and fire departments for assistance rendered? How about being charged per book borrowed from the library? If schools were on a pay-to-learn basis, then the public schools would become like private schools, with many unable to afford education. This would return us to the days when only the wealthy were educated.

Education is already deteriorating, thanks to so many budget cuts to the schools, so we are already a foot or two down the road of having an illiterate, uninformed society. No, socialism is not a bad word, and we need to recognize that a blend is best for all.

Scott Belford from Keystone Heights, FL on April 04, 2016:

Actually, we did have a working model of capitalism before Conservatives came along and ruined it again. Capitalism works nicely . .. IF the forces behind its natural tendency to destroy itself are regulated.

Conservatives, illogically and ironically want capitalism to fail in their drive to get back to a laissez-faire economy.

Neil Sperling from Port Dover Ontario Canada on April 04, 2016:

Humans are amazing creatures. We have the ability to create anything.

We've tried

1- communism and found it destroys incentive to perform

2- Socialism and found the tax burden upon the working class unbearable

3- Capitalism and watched the wealth gap between Rich and Poor widen to the point Capitalism has become wealth control akin to communism.

We can create a system never been tried. Thrivalism

Scott Belford from Keystone Heights, FL on August 01, 2015:

Yep, you are right, pure democracy died with the fall of Athens to Sparta; and in that case, it was limited to "citizens".

Didn't say the Senate wasn't elected (which for quite awhile in our history, it wasn't); I said it doesn't operate as a democracy. For that matter, neither was or is the President; he, and maybe she next year, is elected by the majority of "electors" which may or may not be based on the popular vote ... technically. You might find this interesting regarding how we elect Presidents - http://www.archives.gov/federal-register/electoral...

George Washington was

John Holden on August 01, 2015:

If majority rule is a fundamental requirement of a democracy then there is no democratic government anywhere in the world.

Your example proves that this was not so even with the original concept-males who could serve in the military would not be a majority.

Like all other democracies you have representative democracy rather than direct democracy.

I did not realise that the Senate in the USA was not elected, I thought that like your president, it was!

Scott Belford from Keystone Heights, FL on July 31, 2015:

Democracy, originally, was rule by the majority with no thought given to minority rights. This is how the initial Greek democracy was configured; all decisions were made by a "committee of the whole community"; meaning ALL Athenian "citizens". At this time, 1) citizens were only males who could serve in the military (required) and 2) voting was compulsory.

Majority rule is a fundamental requirement of a democracy. The American gov't is configured to protect minority rights and have rules to prevent both "tyranny by the majority" as well as "tyranny by the minority". Having said that, the House is configured to as close to a true democracy, majority-rule as we get. The Senate, on the other hand, is not run as a democracy. Neither are the powers invested in the executive and judicial branches democratic.

What America really has is a democratic House, an aristocratic Senate, and a monarch for a President; all of whom can be checked by the Supreme Court. This is a far cry from majority rule.

Having said all of that, the definition of democracy has obviously moved away from majority rule to simply "elected" gov't.

John Holden on July 31, 2015:

The USA has an elected government.

In what way is that not a democracy?

Why do you think that being a republic precludes democracy?

Scott Belford from Keystone Heights, FL on July 30, 2015:

Everybody knows America is not a democracy, in the Greek sense. Almost everyone knows America is a federation and a Republic. Nevertheless, it is simply common knowledge that when people call America a democracy, they don't mean it in a literal sense. It is just like calling a copier a Xerox machine, even it wasn't make by Xerox[ same thing.

Assuming they or their fathers had "equal industry and skill" yet find themselves without for no cause of their own, what do you think Jefferson would say then? I don't think there is anyone who disagrees with the idea that someone who refuses to help themselves does not deserve help from others; clearly Jefferson doesn't. But, what if that is NOT the case and someone still needs help?

In a PERFECT world, "A limited government gives the people, any kind of person, the ability to enterprise and compete for market share" would true. But, the world has never been even close to perfect, has it. Take your first phrase, "any kind of person" and apply it to blacks throughout our history. Granted, it is easier for blacks to succeed today than it was yesterday; but there is no comparing the opportunity whites have relative to blacks. Same is true for women.

Please don't try to argue that a few black supermen actually did excel as proof that all blacks are supermen and can do the same thing. That is simply false analogy.

Diamond07 on July 30, 2015:

This article tells a big lie. America is not nor has ever been a democracy. It is a Republic. When Franklin was asked what government they decided on he answered, "A Republic, if you can keep it." A Republic solves all the issues. It allows for equal representation while at the same time having a constitution with some very basic laws in place that can not be superseded (unless of course you are Obama and unconstitutionally create law through the Supreme Court.) Our country, now more than ever, needs to listen to the wisdom of our forefathers: "To take from one because it is thought that his own industry and 
that of his father's has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association -- the guarantee to every one of a free exercise of his industry and the fruits acquired by it." - Thomas Jefferson
, Source: Note in Tracy's "Political Economy," 1816. A limited government gives the people, any kind of person, the ability to enterprise and compete for market share. It allows for an uneducated Sheldon Adelson to create a multi-billion dollar empire off of $200. It allows an immigrant with an 8th grade education named Kirk Kerkorian to build a $15 billion dollar empire. Free enterprise allowed for a college-dropout named Steve Jobs to create one of the most powerful technology companies in the world. Regulations, big government, big taxes, and ultimately government control is not passionate, it is destructive. If you have not visited China yet, I would urge you to see socialism in person. If you have any kind of heart, you will realize that America's children should never suffer in poverty like that. They will not have to if we fight for the America and the 'Republic for which it stands.'

ThankGod Ukachukwu on April 15, 2015:

Why do Socialist leave out the part where individual enterprise is used to build businesses and corporations from scratch and they expect such corporations to to now be handed over to the workers to be owners? Most of the progress the world has made has come from capitalist state because socialism and communism inhibits individual enterprise. The human being is born as a free person capable of achieving greatness sometimes with the support of society or otherwise. Socialism leaves out the basics of developing a society and concentrates on how to share and manage wealth. A society can allow capitalism to enable its people to push the boundaries of their abilities as God has enabled them to achieve giant feats while society ensures that it does not neglect those who are less fortunate. I believe that such systems would be better for the world.

N.Man on April 09, 2015:

Great article. only comments section without hate I've seen all day.

Anyway, I support capitalism as the power is always among the people. How, you ask? Well, if people do not like a company's practices, they can simply choose not to buy that company's products. This will require many people working together, but ignoring a company's products can cripple any company, be it the dollar store or Wallmart.

In my opinion, communism can never work as the government has too much power over people's lives. Power breeds corruption, and ultimate power is an invitation to the government telling them to take over and rule like kings. Many unwanted and useless products can also be made, too specific or too general for the country to use.

Bob Zermop (author) from California, USA on December 11, 2014:

@Codegrad: Thanks so much for stopping by. I'm no longer active on HubPages and am currently on hiatus from writing in general (new city, new job, plenty of work to do), but I occasionally log in just to see what's new here. Glad to hear that our conversation here inspired you; it inspired me too. Don't stop thinking, eh?

I'll second your thanks to John and My Esoteric, and I also want to extend that all of my commenters. Honestly, it made and makes me smile to see productive, interesting, civil discussion in at least this little corner of the Internet.

Neil Sperling from Port Dover Ontario Canada on December 09, 2014:

I believe a new system yet to be dreamed of will emerge from the economic mess the world is in today. The internet has bridged cultures, religions and economic status's and people everywhere are waking up to the basic reality we all want the same thing. To live happy!

As I wrote in my hub "Back To Zero" ... I truly believe a new system is growing..... but not from the top down. Rather it will emerge from the uniting on the bottom.... and the oddest thing is - it does not have to be and likely wont be a planned/staged event. Rather, the new system will evolve. It will evolve from the gradual connecting of individuals who do all they can to be the vibrational energy of the change that is happening. ..... and it IS happening.

Codegrad from Piedmont, Oklahoma on December 09, 2014:

Is there such a thing as "blog-binging"? If so, I just did it. I spent the last hour reading your post and every single comment that followed. Like Awed, I am truly impressed by the the, mostly, civil discussion and logical positioning of arguments in your dialog. I have to give special thanks to Bob, My Esoteric and John for their insights, opinions and general participation in this discussion. I found you all to be very intelligent, articulate and respectful.

Prior to this reading, I only knew enough about capitalism, socialism and communism to repeat the popular sentiment that is typically expressed by the ignorant (no offense intended... I am one). But like many, I am unsatisfied with the economic and political system(s) in place today. And so I search for a resolution or at least understanding of the problems we face. My search continues of course. But I am encouraged by the realization that such different points of view can be discussed in a civil and respectable manner. Thank you to all who were willing to express their opinions and remain cordial and open to the opinions and arguments of others.

I look forward to reading further posts from any of the three of you that I mentioned above.

Take care!

Scott Belford from Keystone Heights, FL on September 01, 2014:

For what its worth, I just started a 36-course lecture series on "Thinking About Capitalism" by Jerry Z. Muller, from the Catholic University; hope it is interesting.

And I am almost finished with Thomas Piketty's "Capital in the 21st Century" ... what a book!

Bob Zermop (author) from California, USA on August 03, 2014:

You're really too kind to leave such a comment, AwedReader. Keep on striving for reason over vitriol, and I'll try to do the same, eh? Thanks for stopping by.

AwedReader on August 03, 2014:

Sir, or bro, or any respect I can convey,

I usually dislike blogs for the lack of thinking, and the blatantly obvious one-sided and unintelligent thinking they display.

But your blog is the very first one I have liked in my whole life. It is so balanced, so comprehensive in its logic, and of course it might not be perfect, but you try so hard to stay reasonable and truly concerned not for political righteousness, but for the good of humanity.

So I really wanna just say I respect you so much. I don't have that many people who think similarly as me (balanced, logical, with a moral set centered on common humanity and God that I think should always be prioritized), but you're one of the few that I have read, including prominent authors and Internet writers. So props, friend.

Maybe we might meet each other, if you happen to go to UC Berkeley. But once again, respect to you, and I really hope you become a legitimate and public academic voice that can really influence the public, or at least some figure for public good.

Scott Belford from Keystone Heights, FL on July 13, 2014:


John Holden on July 13, 2014:

Rather than not improving the social side of life has declined, and by social neither of us are talking about a drink with friends or going to a party, least I'm not, I'm talking about how we interact and that has seriously declined since we were young.

Scott Belford from Keystone Heights, FL on July 13, 2014:

I really wonder if that is true, even considering nuclear power. Everything I listed was all technological. What hasn't improved is the social side of humanity; it simply remains the same. Humans are the assholes we have always been.

John Holden on July 13, 2014:

We may have gained some things My Esoteric, but equally we have lost much.

I'm not sure that it has been a fair trade.

Scott Belford from Keystone Heights, FL on July 13, 2014:

By-the-by, I started reading Thomas Piketty's "Capital in the 21st Century", all 650 pages.

Scott Belford from Keystone Heights, FL on July 13, 2014:

I was alive in the 1950s and have some memory of the convenience of living then. I was alive in the 1960s and have a clear memory of living in that and subsequent decades since. I remember doing accounting by pencil and paper. I remember life without the computer, then I remember life without the Internet. I also remember trying to do my work with a dial-up modem working at 14K.

I know what life is like today and am extremely happy for the growth.

John Holden on May 01, 2014:

But why does earning profits for personal gain automatically serve the public good?

Why is it in the public good to provide a new, more expensive computer operating system or a new mobile phone?

Why is it in the public good to create an insatiable desire for newer bigger

must have things that don't actually do much new?

The demand isn't created by the public, the demand is created by the providers of the new gizmo.

Earning a profit is not high on the scale of reasons for innovation. Most of the great innovations of the 20th century were not motivated by profit but from a desire to innovate funded by private individuals, governments and universities. Capitalism is very good at picking up these ideas and profiting by them, not so good at innovating.

Why is growth good? Especially when that growth is not across the board but when experienced by one sector of society at the expense of another?

By the way, capitalism and regulation are anathema, if you say regulation should be apart of capitalism, you are arguing against capitalism.

Scott Belford from Keystone Heights, FL on May 01, 2014:

John, you just hit the nail on the head. although the word "serving" doesn't quite fit with "profit". The idea is that in the process of earning profits for one's individual benefit, it "automatically" serves the "public" good because, in theory, the only way to do that is satisfy the "demand" created by the public. If you produce something the public doesn't want at a price they can afford, they won't buy it and you go broke.

The problem is, and one reason socialism is popular, is "in theory" doesn't work and needs help, which is what Bob's and my point about regulation is. We also think believe that at the end of the day, "earning a profit" is a greater motivator to 1) entrepreneurship and 2) innovate than "serving the public good" is. As a consequence, in the long run, this leads to a higher potential for growth.

Throughout history, this has generally been true, but not recently, mainly because regulation has broken down.

John Holden on May 01, 2014:

It's hard to get at the point you are making. It appears to be that serving private profit is more desirable than serving the public good!

Scott Belford from Keystone Heights, FL on April 30, 2014:

Yes, that link is one of the sources I use in my hubs on economic systems. The key is "social ownership" rather "private" or "individual" ownership of the means of production.

Further, "A socialist economic system is based on the organisational precept of production for use, meaning the production of goods and services to directly satisfy economic demand and human needs where objects are valued based on their use-value or utility" while a capitalist economy is "structured upon the accumulation of capital and production for profit."

Both are commerce and commercialism is one, but not the only, methodology for accumulating wealth and making a profit.

Common ownership, btw, doesn't mean a bunch of private shareholders who have bought into a company hoping to make a profit via dividends and stock appreciation. Instead, it is a form of public ownership with the goal of serving the public good and not profit making.

John Holden on April 30, 2014:

Actually ME, I've just realised that the Wiki you quote is not one about socialism, it is about the public sector.

Most capitalist systems embrace some public sector ownership of sectors that are not profitable. Government, for example, could be said to be in the public sector.

Have a look at this http://en.wikipedia.org/wiki/Socialism it should clarify things for you, paying particular attention to - ""Social ownership" may refer to cooperative enterprises, common ownership, state ownership, citizen ownership of equity, or any combination of these. There are many varieties of socialism and there is no single definition encapsulating all of them"

John Holden on April 29, 2014:

Take note of the part of your response where you say

"The organisation of the public sector (public ownership) can take several forms, including:"

which more than suggests that the form you go on to quote isn't the only form. I'm not inclined to quote huge chunks of Wiki or any other source.

I don't think any form of oligarchy states explicitly that that is the intention.

Scott Belford from Keystone Heights, FL on April 28, 2014:

Which tells me you can't find a definition which disagrees with mine.

Where, in the definition of capitalism, does it mention oligarchy or even suggest that is the intended outcome? I don't see it there and I really doubt you do either.

John Holden on April 28, 2014:

Really ME, you've found the description of socialism, you read it, don't expect me to do your reading for you.

Rather than commercialism being a subset of capitalism I would describe capitalism as being a subset of commercialism. Capitalism is an oligarchical system.

Scott Belford from Keystone Heights, FL on April 28, 2014:

... ; that challenges my point that "commercialism" and "commerce" aren't systems of ecomomic activity. Commercialism, as I read the definition is simply a subset of capitalism while capitalism and socialism are complete economic systems within the general category of commerce.

Scott Belford from Keystone Heights, FL on April 28, 2014:

You still didn't show me an opposing relevant part.

John Holden on April 28, 2014:

No, you picked out one of many relevant parts. State socialism is not the only proposed form of socialism and apart from for major industries, not one preferred by me.

Scott Belford from Keystone Heights, FL on April 27, 2014:

I did, and picked out the relevant part. Do you have a different part that changes the meaning of what I presented?

John Holden on April 27, 2014:

Ah! Wikipedia, the fount of all knowledge.

Actually, if you read the entry in its entirety it isn't so bad-cherry picking can get anything to say anything you want.

Scott Belford from Keystone Heights, FL on April 27, 2014:

John, Public ownership means ownership on behalf of the general public. According to Wikipedia:

The organisation of the public sector (public ownership) can take several forms, including:

Direct administration funded through taxation; the delivering organisation generally has no specific requirement to meet commercial success criteria, and production decisions are determined by government.

Publicly owned corporations (in some contexts, especially manufacturing, "state-owned enterprises"); which differ from direct administration in that they have greater commercial freedoms and are expected to operate according to commercial criteria, and production decisions are not generally taken by government (although goals may be set for them by government).

Neil Sperling from Port Dover Ontario Canada on April 26, 2014:

All good - https://www.youtube.com/watch?v=XUC7BbBC3mU

John Holden on April 26, 2014:

No, people are people, not the government, oligarchy or monarchy, none of which have any part in the workers owning the means of production.

Scott Belford from Keystone Heights, FL on April 26, 2014:

Shareholders are private individuals owning shares of a company. "Public" is when the People, i.e., government, oligarchy, or monarchy own part or all of the company.

John Holden on April 26, 2014:

What are shareholders if not members of the public?

Scott Belford from Keystone Heights, FL on April 26, 2014:

I had to look that one up, but again I go back to Wikipedia:

"Commercialism is the application of both manufacturing and consumption towards personal usage, or the practices, methods, aims, and spirit of free enterprise geared toward generating profit.

Commercialism can also be used in a negative connotation to refer to the possibility within open-market capitalism to exploit objects, people, or the environment for private gain for the purpose of generating profit.

As such, the related term "commercialized" can be used in a negative fashion, implying that someone or something has been despoiled by commercial or monetary interests.

Commercialism can also refer, positively or negatively, to corporate domination. Commercialism is often closely associated with the corporate world and advertising, and often makes use of advancements in technology."

What Bob and I are talking about is who owns the means to production and distribution and what drives how much is produced. In capitalism, it is private ownership and, depending on whether you are along the Classical or Keynesian economist spectrum, production is dependent on supply, supply-demand, or demand; and maximizing profit is the motivator.

With non-capitalistic economic systems (which are generally some form of socialism, but doesn't have to be), there is some degree of public ownership of the means of production and distribution and how much is produced is, to some degree, dependent on bureaucratic decision-making. Maximizing profit may or may not be a motivator.

John Holden on April 26, 2014:

ME if your stuck for want of an ~ism, how about commercialism?

Commercialism is actually a much more accurate description of the system you favour.

The formation of the USA pre-dates capitalism.

John Holden on April 26, 2014:

Bob, your definitions are too simplistic.

I'll try to illustrate my thinking with a couple of examples,

Example one.

Guy I knew had a business, he'd only employ the long term unemployed. He wouldn't take any profit from the business preferring to reinvest in employment opportunities for the long term unemployed.

He owned the business out right, no mortgages or loans and he refused several very large offers for his business because it would mean him losing control.

Example two.

My father worked for a large corporation. it was listed on several stock exchanges around the world. Anybody who could afford it could buy a piece of the company and shareholders meetings had considerable input into the way the company was run.

By your very lose definition the first example is a capitalist business whilst the second is a socialist business. I think you'll agree that that is a little far fetched.

Scott Belford from Keystone Heights, FL on April 25, 2014:

Have fun with whatever you are doing Bob.

No, I don't think there is any confusion John, not on my part anyway. "Commerce" isn't an alternative to any of the "...isms"; commerce is simply commerce, it doesn't care what the "ism" is. Wikipedia has a pretty good definition of commerce:

"Commerce is the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural and technological systems that are in operation in any country. "

It is the legal, economic, political, social, and cultural systems adopted by a political unit which defines the "ism" that unit's commerce is operating in. In early American history, commerce was conducted under the rules of capitalism as Bob described.

Bob Zermop (author) from California, USA on April 25, 2014:

I'm a little busy and may not have time to respond in depth until next week, but let me just clarify the definitions that I (and, I think, My Esoteric) am using. From the hub: "To save time and to prevent later confusion, I'm going to first make clear what I mean by "capitalism" and "socialism"… What I mean by capitalism is a free market (governed by supply and demand) and private property, including the ownership of the means of production. What I mean by socialism is public ownership on varying levels, but always the means of production. "

It's because I'm using this definition that that I keep saying a fair capitalism - a society with private ownership of the means of production that also provides the ladders of opportunity we discussed and economic regulation - possible. And that fair capitalism (emphasis on "fair" - not just any capitalist society) is better than socialism because of the incentives it provides the productive, the individualism it allows, and the fact that it avoids the easily abused centralized governing power necessary for socialism.

Would love to hear your further thoughts, but just know that I may not respond immediately. Of course I hope that the conversation will continue energetically while I'm gone.

John Holden on April 25, 2014:

You are confusing commerce with capitalism. They are not the same.

Owning your own business does not make you a capitalist, owning somebody else's business does make you a capitalist.

Scott Belford from Keystone Heights, FL on April 24, 2014:

If you are talking about early America, say pre-1810 or 20, yes, that was the way it mostly, but not entirely was. Not so England though, they were at the beginning of their industrial revolution.

Nevertheless, the American system, even as you describe it as a cottage industry, was very much a capitalistic economy. The means of production and distribution were privately owned; production was set by conflict between supply and demand, etc, etc.

The same was true in England, except that labor was becoming or had become oppressed and the monarchy still had much influence in the operation of the economy and private business although I don't think it owned it.

I don't deny or even disagree with your cynicism about the callousness of modern day corporate structure. I do need to note that that attitude does not necessarily trickle down to small businesses, including my own. As a rule, they are much more like, in temperament, what you describe.

John Holden on April 24, 2014:

Simple answer is that businesses were privately owned, but by the people who ran them. No faceless accountants with little or no experience of the job. No faceless shareholders who would abandon a company as quickly as eat their lunch when the going got tough.

Scott Belford from Keystone Heights, FL on April 24, 2014:

It was, what economic system existed in say 1600? Whatever the monarch, be it a king, pope, emperor, or what have you wanted or allowed. From 1600 back, wasn't it basically a feudal system of one sort or another virtually worldwide?

I am not sure what the Greeks had in the 500 B.C.s, that might have been a bit different, but beyond that ...

John Holden on April 24, 2014:

I expected a serious answer to my question!

Scott Belford from Keystone Heights, FL on April 23, 2014:

The King

John Holden on April 23, 2014:

ME. I wonder who owned the businesses before capitalism?

Scott Belford from Keystone Heights, FL on April 23, 2014:

John, you keep focusing on "a system that places all the capital in the hands of the few". You assume that is a given, when it is not. Granted that is a possible outcome, but so is despotic Communism from socialism. The point of regulating capitalism is to keep capital in the hands of those who earn it.

And how does your second paragraph do away with capitalism? It doesn't affect it one way or another; none of those things takes away from or adds to the fact that the means of production and distribution are held in private hands.

John Holden on April 23, 2014:

Bob, but what is so desirable about a system that places all the capital in the hands of the few? That requires so many to live in relative poverty while the few enjoy all the riches?

If you change the system so that people are broadly educated, so that free speech is entrenched, ladders of opportunity exist for all and everything else you want fro society, then you no longer have capitalism.

Believe me, it isn't a case of capitalism or socialism and nothing else, there are other ways. Remember, capitalism, like socialism, are both relatively new concepts.

Scott Belford from Keystone Heights, FL on April 22, 2014:


While I agree with most of your points, I think many are independent of capitalism itself. For example, education (believe it or not, in my day, I was taught those things), free speech, social safety net, and consumer education are all independent of the economic system but indicative of whether we have a government that cares about its citizens welfare or one that doesn't. All of those I absolutely agree with.

Only your ideas on the wealth gap and taxes bother me a little and do have some impact on the capitalist system, primarily the maximum income and restrictions on unproductive savings (I presume you mean corporate)

The progressive income tax and estate tax are direct means to redistribute wealth. I have less problem with the progressive tax than I do the estate tax because I think there is a price that must be paid for the unearned benefits gained as your wealth, and therefore power increase. This is, however, America, and a maximum income simply doesn't work for me. Do I think there are other ways to stop executives from simply taking the profits of a corporation and keeping it for themselves while depriving others the benefit of their own labors, absolutely, but that isn't the way.

Nor is the idea of unproductive savings. It is not in the interest of a company to be sitting on large hordes of cash, as they are today, because the opportunity cost of doing so is high. But, given today's political climate with the Right doing everything it can to quash growth so that Obama won't look good, the cost of doing something may be higher if the choice they make about which way the gov't is going to move is wrong.

Bob Zermop (author) from California, USA on April 21, 2014:

John, imagine a society in which -

- Public education was excellent (and included basic economics and modern world politics - effective democracies and even republics need educated constituencies... but I digress).

- Free speech was facilitated - think limits on campaign contributions, bypassing the publishing industry's media with personal publishing (think Internet), etc.

- A social safety net (housing, food, healthcare, utilities) and "ladders" of opportunity (education, job training, reducing unemployment) existed.

- Regulation prevents the wealth gap from widening too much (Regulation like maybe a progressive income tax, estate tax, maximum income (?), restrictions on unproductive savings (?), etc.).

- The free market of supply and demand is regulated with consumer education (labeling, removal of dangerous products and false advertising), restrictions on monopolies, and probably many other things that I'm not qualified to write about.

A capitalist society with all of these would still be fully capitalist. It wouldn't be the capitalism that we are used to, but it would technically still be capitalist - hence my use of the term "fair capitalism" rather than socialism, even though some Americans might consider my ideas quite leftist.

Scott Belford from Keystone Heights, FL on April 21, 2014:

But that is where the "properly regulated" comes in. It is human nature, once someone has an advantage to unfairly press that advantage until they have it all. There are no checks and balances in capitalism to counteract greed and avarice; in fact it provides positive feedback for them until it self-destructs.

Proper regulation counter greed and avarice, providing the negative feedback needed to keep the system stable and functioning properly. It is still capitalism, the means of production and distribution are still in private hands, production is set by supply and demand, individuals are free to enter and leave only limited by the talent and resources; none of that has changed.

What has changed is you prevent the Bernie Madoff's and Citibanks and AIGs from wreaking havoc while they chase the next dollar.

Actually capitalism was in reaction to conservativism and the monarchy, it followed the age of enlightenment; socialism was born at the same time, e.g., the French Revolution.

John Holden on April 21, 2014:

But capita;ism doesn't allow for individualism, life health property and all that jazz apart from a select few.

True, it has the most potential for oppressing the most people but that is not a very desirable goal is it?

The world worked well without capitalism and without socialism. Socialism was born of the greed of capitalism.

Kill oppressive capitalism and you kill the need for socialism.

Scott Belford from Keystone Heights, FL on April 21, 2014:

Because capitalism is the economic system of those who believe in the Hobbes-Lockean idea of individualism, you know Life, health, Liberty, and Property and all that jazz. Properly managed, capitalism is the most robust of all economic systems with the most potential. That isn't saying socialism doesn't work, there are plenty of examples that it does. But, in the long-term, a correctly regulated capitalist system will do better.

John Holden on April 21, 2014:

Why does capitalism need saving from anything?

Saving capitalism from itself is rather like saving slavery from itself, meaningless and contradictory.

Scott Belford from Keystone Heights, FL on April 21, 2014:

Technically, I think John is right. Capitalism, per se, isn't supposed to provide anything other than a format where the means of production and distribution are privately owned and individuals can participate in the marketplace with the idea of earning a profit based on competition between participants and production of goods and services is determined by supply and demand.

As already mentioned earlier, without regulation capitalism must fail because, over time, money and power will concentrate in the hands of a few, thereby barring individuals from participating in the marketplace and destroying the supply/demand mechanism. Ownership of the means of production and distribution, while still private, will be limited to a few privileged individuals or corporations.

How much or how little capitalism is regulated has nothing to do with capitalism itself, but the philosophical orientation of the politicians. Classical liberals, such as libertarians, will not regulate and let capitalism fail; conservatives and active-state liberals will regulate and save capitalism, just for different reasons and in different ways. In all cases, at least until capitalism self-destructs in some scenarios, it is still capitalism.

What Bob Z is offering are ideas for active-state liberals to intervene to save capitalism from itself.

John Holden on April 21, 2014:

The problem is though, Bob, that what you describe as fair capitalism isn't capitalism.

Capitalism isn't predicated on steady ladders of opportunity for all, not excellent public education for all. It relies on keeping most people uneducated (educated well enough to make money for somebody else is not well educated) and deprived of opportunity.

Capitalism isn't three centuries old but the world worked for many thousands of years without capitalism. We need a third way which takes the best from the old and adds it to the best of the new.

That is not capitalism.

Bob Zermop (author) from California, USA on April 21, 2014:

@Adam Wilson (3 months late :D ): Actually, I agree with most of you've written. American capitalism is broken, and the American Dream does seem tattered. Our point of disagreement lies in our thoughts on solutions. You call yourself Anarcho-syndicalist, and I would assume that you consider yourself quite to the left on the capitalism/socialism spectrum. I, on the other hand, would prefer to see our system remain capitalist, but with more reasonable regulation. A fair capitalism, as noted in the hub, would provide steady ladders of opportunity to anyone in the society - I'm thinking excellent public education, social safety net, progressive income tax, estate tax, and lately I've been mulling over maximum salaries and restrictions on (unproductive) hoarded savings.

Excuse me for responding so extremely late - I haven't been active on this site for a while and my email notifications seem to be inconsistent.

Bob Zermop (author) from California, USA on February 25, 2014:

@callum: Thanks for your stopping by. The most interesting question that you've gotten me to think upon is, "Does gov. regulation hurt small businesses more than it helps them, because big businesses are more able to influence the political process (lobbies, etc.) and obtain advantages like tax breaks?"

My initial thoughts are that this is a good point on the vulnerabilities of regulation, but that flaws that need address in our current reg system doesn't affect the need for something that breaks monopolies. Thanks as always, My Esoteric, for your explanation - makes clear how monopolies are very possible when the cost of entering into competition is high.

In response to your (callum's) point on wealth gaps: they would certainly be possible in economies that are an employer's market, when those who hire have plenty of options of who to hire. This is one of the reasons labor in China, for example, is so cheap. Another possibility is when - not imaginably - major corporations who control large amounts of jobs have an effective "monopoly" on jobs and can decide their own wages without significant competition. The underlying problem is not enough jobs.

And lastly, I'll respond to your point on "no government". I'm unsure if you actually meant "no government" at all, but if you did, I would point to the things we need large scale cooperation to do (roads, factory production, international trade, etc.) - there, we need a governing body with enough scope and power to mediate the interests of people quite isolated from one another. Can't really endorse anarchy.

Thanks again, calum, look forward to hearing further thoughts.

Scott Belford from Keystone Heights, FL on February 25, 2014:

Both of these statements are right and wrong, depending on the scenario: 1) "Without government interference, companies can and will quickly build up monopolies that can drive prices far beyond the product's value, rendering the free market system of supply-and-demand useless" and 2) some criticisms, firstly, why would this be beneficial to the companies? If something that used to be $2 now costs you $5 you would either stop buying it or, buy it from someone else, in both of these cases this is BAD for the company who now makes less money."

In any economic system, there are many variables which control a companies ability to function in a market place. They deal with labor, equipment, financial, resource, distribution, and a host of other requirements. Some are easy to acquire, some are much harder.

If you are going to grow and sell corn, it is hard to monopolize that market, so statement number 1 is clearly wrong. But, to search for, produce, and distribute oil in America is extremely difficult which is why Standard Oil was able to create both a horizontal and vertical monopoly by 1908; thereby controlling the market in all respects, proving statement number 2 wrong. That is why President T. Roosevelt busted Standard Oil up.

calum on February 25, 2014:

"Without government interference, companies can and will quickly build up monopolies that can drive prices far beyond the product's value, rendering the free market system of supply-and-demand useless" you have clearly misunderstood economics, capitalism and what causes monopolies.

"drive prices far beyond the product's value" some criticisms, firstly, why would this be beneficial to the companies? If something that used to be $2 now costs you $5 you would either stop buying it or, buy it from someone else, in both of these cases this is BAD for the company who now makes less money.

"Without government interference, companies can and will quickly build up monopolies", it is only with government that companies CAN build monopolies; or at least monopolies who's aim is to inflate prices. These large companies naturally have more money, this is fine, but when you have politicians who can be bribed / lobbied this becomes a problem. The unfair regulation and taxes placed on small businesses, whilst large firms get tax cuts and preferential treatment (ever heard of Starbucks?) is what causes monopolies, not unfettered free market economies. The only time when a company can grow large is when it is beneficial for their client base; meaning that companies who CUT prices will succeed and gain larger profits than those who do the opposite.

"very dangerous in a representative democracy" okay here you are criticizing the "extremes of capitalism" yet you talk about governance and taxation. As the only way that bribing politicians could benefit a company would be through tax cuts or publicly funded projects, (both which involve taxation) this is clearly not a FREE market economy; therefore your criticism of uncontrolled capitalism is in fact a criticism of CONTROLLED capitalism; the very thing you are purporting.

"Some seem to think that taxation of any sort is unfair" it is not "unfair" it is theft; if a man walks up to you in the street, points a gun at you and asks for money, it is theft. Somehow when the government does the same thing it is not theft, somehow it is "necessary", who told you it was necessary? The man with the gun?

" taxation is necessary (like mentioned above) to prevent the wealthy and corporations from monopolizing and owning the democratic process" Taxation allows the government to grow larger thus giving them more power, thus giving companies more incentive to "own" the democratic process, thus awarding them more control and therefore more tax cuts ect. If you somehow think that a government could get to the stage of introducing any tax without being lobbied and adding countless exemptions you are sadly mistaken. Any attempt to punish the rich through taxation will either fail or hurt the economy and the poorest.

"The role of the government should be to work without bias for the happiness of all the people, and that will not happen if a section of the population has greater influence" a simple solution to this would be to have no government.

You also seem to believe that capitalism leads to monumental wealth gaps, resulting in abject poverty for all but a few, how could this be possible? Who would work for a company if it meant that they had to live in abject poverty? (excluding those in developing countries; largely held back by governments and corrupt politicians) let me explain why these companies would fail; Say I sell a pizza for $10 and I pay a worker $5/per pizza sold, excluding material costs ect. I have made a profit of $5/pizza. Now another company comes along and sells pizzas for the same price but this time they pay their workers $7/pizza, the company still makes $3 for each pizza. who would you work for? this is one reason why it is almost impossible to make vast amounts of money whilst only benefiting yourself. It also would not benefit the rich if everyone lived in poverty, who would buy their products or produce the fancy stuff they want if everyone was payed unfair wages.

Scott Belford from Keystone Heights, FL on January 18, 2014:

There is no question the question the political spectrum is a circle; Adolph Hitler and Joseph Stalin were two of a kind politically although both would kill you if you said that to their face, @Peter Rand.

Your very first statement gave you away as an anarchist

-"Okay lets address freedom. Is it freedom for a government to steal someones money to give it to an organization the person does not, or does it really doesn't matter, agree with."

For you, freedom (I assume you also mean liberty) is absolute, not to be infringed upon by any one or any organization for any reason. (I assume you do exclude illegal behavior, so long as you get to define what is illegal) Of course, at no time in history has this, or will this exist. The example of Singapore you offer is a poor one. While it does have a very free economy, relative to the rest of China, its people are not free by any means, nor do they have a say in what the government does with the taxes it collects, just like you hate.

Peter Rand on January 18, 2014:

Okay lets address freedom. Is it freedom for a government to steal someones money to give it to an organization the person does not, or does it really doesn't matter, agree with. No that's taking away choice. Another thing under socialism is higher taxes. Higher taxes leave people with less money to buy goods. It also drives away corporations and business owner, it takes away the incentive for people to work because they know they can mooch off other people. When corporations leave jobs leave, when jobs leave the money in taxes leave, when those leave the government can no longer provide the "safety net" because it is bankrupt. I believe someone wanted an example of Capitalism at its finest? Singapore and Hong Kong. They are the smartest nation - Singapore, and place - Hong Kong, because technically Hong Kong is Chinese but it has one of the freest economies in the world. This is also where major corporations take roots because of the low low taxes, go guess what? the government gets the money that places like Europe or America, under the current administration we are socialist. It is like Ayn Rand said would happen in "Atlas Shrugged" which everyone should read. America was not made great because of socialism it was because of capitalism, yes some people got paid less than others, but the average wealth of Americans during the capitalist glory years. America was made great because we had a limited government who did eventually break up monopolies, which is in the DOI and United States CONSTITUTION, socialism never will work, communism never will work, never has, never will, it has been proven throughout history, as C.S Lewis Said, "Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be "cured" against one's will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.” So socialist and communists and democrats and mainstream republicans you need to listen to him. And addressing poverty Benjamin Franklin said,I am for doing good to the poor, but...I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed...that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.” I mean the founding fathers were all capitalist that thought the government job was to make sure capitalism and competition was secured in America. Freedoms are being taken away from Americans daily, the government is getting more powerful and larger. Now remember in socialism you have the powerful getting rich, in capitalism yo have the rich getting powerful, at least the rich in capitalism needs the people to buy their products so that they can stay rich, the rich in socialism just tax more and make more restrictive laws that they say, "is good for the people." yeah I have heard that a lot. People need to grow up and see that working hard needs to pay off and quit providing stolen money to people who sit on their couches and play video games. Oh and Adam Wilson , I do not get what you mean by I agree with Marx but I am an Anarchist, they are the polar extremes, are you saying the political map should not be a line but a circle? I'm not understanding that.

Scott Belford from Keystone Heights, FL on January 02, 2014:

Have you thought about considering yourself a Platoist, to coin a word. His Republic is basically the State you seek, I believe.

Adam Wilson on January 02, 2014:

A year ago I stopped by and offered a concise definition of Marxist theory, frustrated by the numerous misconceptions and disagreements on matters of ideology and actual practice. Now that I am back, it is interesting to see how the discussion has progressed (surprised that this debate is still active after all this time).

From my own Marxist/Anarcho-syndicalist viewpoint, I believe that the theories of Marx were a valuable insight to the workings of the global plutocracy. Marx had applied similar laws as those of the historical class warfare theory to that of economic production.

Where Marx failed, however, was that his proposals for the establishment of a classless society were inherently flawed, working too much within the capitalist system from a bourgeois mindset and relying too heavily on the statist, short-sighted approach. In fact, I would only consider myself a Marxist in that I believe that his economical class warfare theories have a remarkable soundness about them. In practical application my ideas are more in line with those of Noam Chomsky, and the 19th century Russian anarchist Mikhail Bakunin.

The USA is certainly not a free-market, laissez-faire capitalist state. The government is controlled to a great extent by almost totalitarian corporations and the wealthy lobbyists appointed by them. It has actively funded and supported repressive regimes, especially in Latin America and the Middle East to further its monopoly over the world's natural wealth and resources. Notable examples being Nicaragua and Iran, both very resource rich countries in strategic locations.

In the case of Iraq, the US and its puppet organisations installed Saddam, supported him during the worst of his excesses and then turned on him because he threatened US global hegemony by switching Iraq's oil sales to the Euro, resulting in 20% higher profits than selling oil by the dollar. After imposing brutal sanctions that starved the Iraqi people, destroying their culture, economy, and vibrant middle class, and doing no damage to the ruling clique whatsoever, they invaded.

The American Dream is just that: a dream. The only place that the deluded people of the world see a free market is in the speeches of politicians. Likewise, any hopes of a true people's democracy withered away long ago. The US only serves to support the international entrenched oligarchy.

The US government, which has always professed an adherence to 'fair free-market principles', has been highly interventionist, aiding its own industries with government interference. The US aircraft industry would not exist today if the US military had not placed exorbitant orders in the 50s. The military-industrial complex has always profited from the actions of the US government.

Some may say that capitalism is 'rugged individualism in action' but a corporation is by no means 'individualist', essentially totalitarian in nature with strict top-down control. The power of trade unions, typically a channel for the working class to fight back against this oppression, are severely restricted in the US. They also lack a labour-based party to represent their interests on a national scale, achieving benefits only for their own members but not helping the nation as a whole.

The result of this is that business interests can organise, but the common man cannot. In the American corporations, profits are privatised, but costs socialised.

... Whew. Another rant on the failings of corporatism from Adam Wilson. Feel free to disagree. Open debate is the way forward.

I really should get round to getting myself an account.

Bob Zermop (author) from California, USA on November 23, 2013:

Thank you for stopping by, AbannaShooppy.

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